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P LANNING P ARADIGM
future from the point of view of society as
a whole. A second possibility is for the
government to do an entire comprehensive
evaluation of all agencies on a periodic
basis with each and every agency’s
continued existence contingent on their
worth at the time of the evaluation.
Even if future evaluation of government
agencies is predetermined at incep-
tion or there is a periodic general evaluation
of all government agencies, a major
problem, perhaps even an insurmountable
one, is that, the evaluation of government
functions, especially in democracies,
is extremely diffi cult, and, the
pruning, the winnowing down of the
government and the elimination of agencies
deemed no longer to be effective is
even more diffi cult.
An essential reason for the complication
is the valuing of government goods
and services and the agencies providing
them. For most government goods, there
is no market value on these goods and
services. How does one value these goods
and services when there is no market
value and when different people, different
constituencies, value them differently,
sometimes totally differently? Can cost
benefi t analysis be used effectively when
the very value of the benefi ts is just what
is under question? In the process that is
commonly used to assess the value of an
agency, there is generally an upward bias
in the estimate of the worth of an agency.
Typically, in order to evaluate an agency,
to evaluate the value of the good or service
an agency provides, experts or profes-
18 THE IIPM THINK TANK
sionals in the good or service are generally
consulted. However, a lot of times,
these experts are experts or have become
experts precisely because they work or
have previously worked in providing the
good or service. This means, as a rule,
that they have a vested interest in the
continuance of the good or service and
are inclined to overstate the value of the
In a democracy, people expect the
govt to help them in the face of life’s
diffi culties to try to help them
good or service. For instance, the government
might bring in an army general to
discuss whether there is need for the continuance
of a particular military agency
for defense.
In addition, there is a potential unemployment
problem. The government is
always subject to competing welfare goals
that are not necessarily compatible. In a
democracy, people expect the government
to help them in the face of life’s
diffi culties, or, at least, to try to help
them. One of the goals of government is
to maintain high levels of employment. If
the government eliminates an agency of
government that is now dysfunctional in
order to increase effi ciency within the
government itself, or in the economy as a
whole, it generates unemployment. If
there are a large number of people in the
agency, its elimination is also likely to
have substantial negative multiplier effects
on the economy.
Making a judgment on the continual
existence or elimination of a government
agency may be less onerous than deciding
on the scale of operation of an agency
once the decision for its continued existence
is deemed to be appropriate. Of
course, the optimal size of an agency is up
to the point where the marginal benefi t
equals the marginal cost of running the
agency. If there is a hard time agreeing on
valuing the total value of an agency, how
much more so, if even possible, of getting
people with different assessments of value,
to agree on the value of the marginal
benefi t of an agency.
What about planning? Is economic
planning valuable? How valuable? The
answers are, to say the least, both historically
and at the present time, a bit
controversial. The valuation of planning
differs depending on who you ask, and, it
must be kept in mind, it is the valuation
of planning that is fundamental in making
the decision of whether or not to have a
planning agency and in properly ascer-